Stats & news CBS | Globe | TrontoStar today | TSX charts

Charts

Canadian pacific

| FP Trading Desk

Reasearch in Motion
google.com/finance | 5yr

| T-CNR

many notes below from Andrew L. de Courcy-Ireland, CIM, FCSI
Portfolio Manager CANACCORD CAPITALTel: (514) 844-5520

click chart for one second chart

The Number Cruncher blog is now online

We'll show you how to sift through the markets and screen out the winners and the losers. Today: Canadian stocks in the fast lane

2008

Monday 08 September 2008 (CP : TSX : $60.52) Announces surprise CFO replacement
Blackmont Capital maintains "hold", 12-month target price is cut to $68.00
RBC Capital Markets maintains "sector perform", 12-month target price is $68.00

Monday 28 July 2008 Canadian Pacific Railway (CP : TSX : $63.18)
Adjusting target to reflect lower multiples
Blackmont Capital maintains "hold", 12-month target price lowered to $69.00

Sunday 27 July 2008 (CP : TSX : $63.23 | NYSE : US$62.41)
Disappointing Q2 results; 2008 EPS guidance lowered
TD Newcrest maintains "hold", 12-month target price lowered to $71.00

Thursday 24 July 2008 C (CP : TSX : $65.19 | NYSE : US$64.50)
Company again reduced guidance for 2008
Blackmont Capital maintains "hold", 12-month target price lowered to $70.50
BMO Nesbitt Burns maintains "outperform", 12-month target price is $85.00
Canaccord Capital maintains "buy", 12-month target price is $91.00
RBC Capital Markets maintains "sector perform", 12-month target price decreased to $68.00

Wednesday Jul 23, 2008 Flooding, fuel send CPR income down the track
Hit by a 40-per-cent plunge in second-quarter net income, Canadian Pacific Railway Ltd. vowed yesterday to be a leaner organization...

Monday 21 July 2008 (CP : TSX : $66.88)CP expected to report $0.93 EPS for the quarter
Blackmont Capital maintains "hold", 12-month target price is $75.00

Tuesday 15 July 2008 (CP : TSX : $63.71) Second half of the year should be better than the first
Canaccord Capital maintains "buy", 12-month target price is $91.00

Friday Jun 27, 2008 Roadlink acquires CP ships trucking
RoadLink, a major Atlanta-based independent intermodal logistics company, said yesterday it is buying Montreal's CP Ships Trucking Ltd., known as C-Truck, from the Canadian unit of European shipping giant Hapag-Lloyd. C-Truck, which operates 240 trucks, has six terminals in Canada and the U.S. On closing, RoadLink will create an alliance with Fastfrate, a Canadian logistics firm, to provide container transportation services across North America.

Friday 13 June 2008 (CP : TSX : $66.39) Reducing EPS estimates by $0.09 for 2008
Blackmont Capital maintains "hold", 12-month target price is $75.00

Wednesday 04 June 2008 (CP : TSX : $70.87) Favorable WTI and coal price assumptions
Canaccord Capital maintains "buy", 12-month target price is raised to $91.00

Tuesday 03 June 2008 (CP : TSX : $70.83 | NYSE : US$70.93) CP Shares reach full valuation
RBC Capital Markets maintains "sector perform", 12-month target price is $73.00

Tuesday 13 May 2008 (CP : TSX : $72.62) Attractive valuation
BMO Capital Markets maintains "outperform", 12-month target price is raised to $85.00

Tuesday 06 May 2008 (CP : TSX : $73.10 | NYSE : US$72.14) Attractive valuation
BMO Nesbitt Burns maintains "outperform", 12-month target price raised to $85.00

Wednesday 23 April 2008 CP Rail (CP) - $68.22 - Core Earnings Below Expectations
Outperform, Average Risk, Price Target: $74.00 (was $78.00)
CP reported Q1/08 operating EPS of $0.75, compared to RBC CM’s downward revised estimate of $0.73. Revenue came in-line, however earnings benefited from a lower tax rate of 18%. Assuming a 29% tax rate, this implies EPS was positively impacted by taxes by as much as $0.10 in the quarter. Also impacting results during the quarter were harsh winter weather, higher fuel costs and the impact of forex. Management reduced its 2008 EPS guidance range to $4.40-$4.60 (from $4.65-$4.80). This is the second time CP has lowered guidance since the beginning of the year and the reduction is much more pronounced than RBC CM anticipated, especially given that both the tax rate and interest rates are trending below prior guidance. Given current credit market conditions, CP wrote down its ABCP investments by another $21MM ($15MM after tax) in Q1/08 in addition to the $21MM writedown in Q3/07.

Wednesday Apr 23, 2008 CP Rail cuts guidance as profit drops 29 per cent
Canadian Pacific Railway Ltd. reported a 29-per-cent drop in first-quarter profit yesterday, hurt by higher fuel costs and...

Tuesday 22 April 2008 Weather, fuel costs take toll on CPR results
Profit falls 29% to $91-million

Thursday 10 April 2008 (CP : TSX : $66.16 | NYSE : US$65.18)
First-quarter results expected April 22
BMO Nesbitt Burns maintains a "outperform", target price is $80.00
TD Newcrest maintains a "buy", 12-month target price is $77.00

Thursday 20 March 2008 Canadian Pacific Railway (CP : TSX : $65.45 | NYSE : US$65.00)
Eastern operations affected by tough weather conditions

RBC Capital Markets maintains a "outperform", target price is $78.00

Friday 22 February 2008 (CP : TSX : $72.50 | NYSE : US$72.05)
Guidance modified on unfavourable CTA adjustment
RBC Capital Markets maintains a "outperform", target price is $78.00

Thursday 21 February 2008 (CP : TSX : $73.26), Net Change: 1.57, % Change: 2.19%, Volume: 698,054
VRCP is also an acronym for: Variable Rate Constant Power, Vitreoretinochoroidopathy, and Voice Recognition Call Processing. The rails are still attracting substantial interest in the markets as way to play the agriculture/infrastructure/ship-ourraw- material-to-china-so-they-can-send-us-back-toys-and-bluray-dvd-machines trade. The Canadian Transportation Agency (CTA) announced a final adjusted volume-related composite price index (VRCPI) of 1.0639 for railway revenue caps for the movement of Western grain for crop year 2007-2008. This represents a $72.2 million reduction to 2007-2008 revenue caps, which translates to $2.59 per tonne based on forecasted tonnage of 27.85 million metric tonnes. The decision will have a direct impact on grain revenues for CP Railway and CN (CNR) as a result of lower freight rates for shipping government-regulated, western Canadian grain to export markets. This in turn led CP Railway to decrease its 2008 EPS guidance by C$0.05 to C$4.65- 4.80. The CTA adjustment impacts only regulated grain in Canada and only impacts CP Railway's 2008 earnings by C$0.05, and given that analysts are now generally looking onwards to 2009 earnings for valuation – this change has even less impact. Canaccord Adams Transportation Analyst Tom Varesh is maintaining his overall positive views on the company and believes this event will not...de-rail his thesis. Zing!

(CP): $71.69 –CP Modifies Guidance on Unfavourable CTA Adjustment
Outperform, Average Risk, Price Target: $78.00
CP announced that the CTA has made an adjustment to the company's revenue entitlement ($2.59/tn impact on railway revenue) on their Canadian grain business and that the decision is retroactive to August 1, 2007. This adjustment was anticipated by CP although the retroactive component as well as the magnitude of the adjustment caught the company by surprise. CP plans to appeal the retroactive component in Federal Court. The Canadian grain business represents 9% of CP's revenue and operates under a revenue entitlement system for which the government sets a cap on revenue per ton (but not on volume). The adjustment results in a $0.05 impact on management's 2008 EPS guidance, which decreases to $4.65-$4.80. Management also stated that the retroactive component of the CTA's adjustment could have a further $0.08 impact if CP's appeal is unsuccessful. At this time, RBC CM is not revising its 2008E EPS estimate of $4.85 until there is further clarity with respect to the appeal process. A key point is that this adjustment is not a reflection of a change in demand or supply conditions (which RBC CM believes remain robust) - rather it is due to the regulatory aspect of CP's grain business.

Thursday Feb 14, 2008 CP Rail renews Fastfrate contract for $500 million
Canadian Pacific Railway Ltd., the country's second-largest railroad, renewed a logistics contract with trucking company Consolidated Fastfrate for $500 million. The 10-year extension was announced yesterday by the Calgary- based railroad and closely held Consolidated Fastfrate, based in Woodbridge, Ont., in a statement. The companies have worked together since 1966 and the contract extension, to 2016, will mark 50 years of cooperation between them, they said. Fenway Partners and Westerkirk Holdings together own 75 per cent of Consolidated Fastfrate, with the remainder owned by the transportation company's management, according to the statement.

Wednesday 30 January 2008 (CP): $67.26 - Core EPS Light
Outperform, Average Risk, Price Target: $78.00 (was $83.00)
CP reported headline operating EPS of $1.20 compared to RBC CM’s expectations of $1.16 and consensus of $1.15. The results included a Q4 tax benefit that pushed the effective tax rate below 25% (versus 29%-31%). Backing out the tax impact brings EPS closer to $1.12, which is below estimates. Given the weather related challenges and supply disruptions in Q4, RBC CM considers the $1.12 fairly good all things considered. Management reaffirmed its 2008 outlook and reiterated its expectation that operating EPS will be in the range of $4.70 to $4.85, driven by strong demand in the bulk segment, expense saving initiatives and strong contract price renewals. CP anticipates revenues to increase 4%-6% in 2008 while total operating expenses are expected to increase by 3%-5%. RBC CM expects CP's high exposure to bulk will help sentiment toward CP shares for two reasons: 1) demand for bulk is strong and 2) bulk demand is not sensitive to the economy, i.e. grain, fertilizers and coal are linked to international commodity markets which have their own supply/demand dynamic. As a result, this is expected to drive EPS growth of 9%-12% for CP (as compared to 9% for CNR). Despite the benefit of the bulk franchise, CP's valuation is expected to be tempered by uncertainty surrounding a decision on PRB. Given the significant capital commitment required, lack of details as to the project's economics and uncertainty as to the financing, this could weigh on CP shares until a decision is finalized.

Friday 25 January 2008 (CP : TSX : $64.10) Q4 preview
Canaccord Adams maintains "buy", 12-month target price is $72.75

2007

Friday 14 December 2007 (CP : TSX : $65.53 | NYSE : US$64.44)
Earnings warning issued
Blackmont Capital maintains a "hold", 12-month target price is $74.25
RBC Capital Markets maintains a "outperform", target price is $83.00

Thursday 13 December 2007(CP) - $67.20 - As Expected - Fuel and Weather To Impact Q4
Outperform, Average Risk, Price Target: $83.00
CP announced that its 2007 EPS is expected to come in at the bottom of "or even below" their guidance range of $4.30 to $4.45. This is a further weakening of the company's outlook since its investor day on October 30, when management had been pointing to the lower end of that range. Nevertheless, the company reiterated its 2008 guidance of $4.70 to $4.85. Management indicated in the release that the lowered guidance was due to: 1) recent harsh weather conditions that have caused a disruption in train operations in the company's Western Corridor and 2) the lag in its fuel recovery program. Given that CP buys its fuel one month in advance and holds fuel in inventory – a rapid rise in fuel prices results in a lag effect on surcharge recoveries. RBC CM does not consider the guidance warning to be due to demand-driven factors, and believes demand factors will remain strong given the company’s appealing product mix that has a high bulk component.

Canadian Pacific Railway (CP) was down slightly after saying its 2007 adjusted diluted earnings per share may be at the bottom of, or even below, its forecast range because of recent harsh weather conditions that caused disruptions in its busy Western corridor.

Thursday 13 December 2007 (CP : TSX : $66.38), Net Change: -0.82, % Change: -1.22%, Volume: 1,198,841
Stick some in your Xmas stocking and Bob’s your uncle! Canadian Pacific Railways announced that adjusted diluted earnings per share for 2007 may be at the bottom of, or even below, the range announced earlier this year, of $4.30-4.45. This is a result of recent harsh weather conditions that caused disruptions in train operations in CP’s busy Western corridor, and a lag in the fuel recovery program. The company stated, “With a focus on execution excellence and cost management, we remain confident we will deliver our earnings target in 2008 of $4.70 to $4.85.” Canaccord Adams Transportation Analyst Tom Varesh remains bullish on the story, which appears to be a solid way for investors to gain agriculture exposure in their portfolios. CP is estimated to generate almost one third of its revenues from agriculture, fertilizer and sulphur.

Wednesday 12 December 2007 Canadian Pacific downgrades 2007 profit expectation
Blames harsh weather in the west and high fuel prices, but says its outlook for 2008 is unchanged

Tuesday 04 December 2007 (CP : TSX : $64.56)
Volumes steady but fuel prices putting a drag on Q4 results
RBC Capital Markets maintains an "outperform", target of $83.00

Wednesday 28 November 2007 (CP : TSX : $61.09)
Misunderstood, underappreciated and mis-priced
BMO Nesbitt Burns maintains an "outperform", target of $80.00

Wednesday 07 November 2007 (CP : TSX : $63.82)
Held Investor Day and releases third-quarter results last week
Canaccord Adams upgrades to "buy", target price cut to $75.00

Thursday 01 November 2007 Canadian Pacific Railway (CP : TSX : $66.48)
Decent guidance given soft industry conditions
Blackmont Capital maintains a "hold", 12-month target price is $74.25
RBC Capital Markets maintains a "outperform", target price cut to $83.00

(CP-T, CP-N) C$64.84 Bill MacKenzie, CA, CFA, 416 308 3405
BUY ? (Prior: HOLD);Target: C$74.00 ? (Prior: C$79.00)

Wednesday 31 October 2007 (CP : TSX : $64.84 | NYSE : US$67.88)
Soft Q3 as expected
Blackmont Capital maintains "hold", 12-month target price is raised to $74.25
RBC Capital Markets maintains "sector outperform", 12-month target price is not given

Tuesday 30 October 2007 CPR sees earnings growth next year
sees earnings before special items next year rising between

Monday 29 October 2007 (CP : TSX : $66.60 | NYSE : US$69.05)
Focus of analyst day will be 2008 guidance and DM&E
RBC Capital Markets maintains a "outperform", target price raised to $86.00

Thursday 25 October 2007 (CP : TSX : $67.45)
Q3 preview
Blackmont Capital maintains "hold", 12-month target price is cut to $73.75

Friday 12 October 2007 (CP : TSX : $70.61)
Faces a number of headwinds
Blackmont Capital maintains "hold", 12-month target price is raised to $78.50

Friday 12 October 2007 (CP : TSX : $70.14 | NYSE : US$71.81)
Q3 is expected to be negatively impacted by exchange rate, high fuel costs and revenue mix
BMO Capital Markets maintains "outperform", 12-month target price is $80.00

Thursday 27 September 2007 MONTREAL: CN IN MAJOR U.S. ACQUISITION
Canadian National Railway Co., Canada's biggest railway, says it has made a major acquisition in the area of Chicago. CN says it will pay US$300 million to buy up most of the more than 300 kilometres of track around the city owned by the Elgin, Joliet and Eastern Railway Co. CN says the purchase will enable it to resolve bottleneck in its current shipments through Chicago. The Canadian road also says it will sell some of its property in Chicago which will finance planned improvements to its acquisition's infrastructure, lands that the city will have the option of using to improve its bid to host the 2016 Summer Olympic Games.

Thursday 27 September 2007 10:26 Canadian National Railway (CNR : TSX : $56.90), Net Change: 0.97, % Change: 1.73%, Volume: 1,584,435
(CP : TSX : $69.23), Net Change: 0.86, % Change: 1.26%, Volume: 856,504
Turning a lemon into lemonade. In their second quarter reports, which were released in July, both Canadian railroads indicated that they were starting to encounter significant industry challenges, stemming from the appreciation of the Canadian dollar, increased fuel costs, a slowdown in the forest products sector and other factors. At that time, Canadian National cut its growth forecast to 5% from 10%+, while Canadian Pacific maintained its $4.30-4.45 per share EPS estimates, implying a forecast growth rate of 8.8% to 12.6%. In recent weeks, the railroads seem to have adopted a new approach to this apparent slowdown in industry growth momentum by going shopping to boost their presence in certain regions. Canadian National, using the strong Canadian currency to go shopping south of the border, announced yesterday that it has agreed to acquire the major part of Elgin, Joliet and Eastern Railway's operations for US$300 million. This move is designed toimprove traffic flow in the Chicago area by moving traffic out of the urban core and into outlying areas. Canadian Pacific also has been active, recently agreeing to purchase the Dakota, Minnesota & Eastern railroad for US$1.48 billion to improve its access to markets in the U.S.Midwest, particularly in the agri-product, coal and ethanol areas, with the potential for expansion into the Powder River Basin.

Monday 24 September 2007 (CP : TSX : $68.54 | NYSE : US$68.50)
Management provides colour on DM&E transaction
RBC Capital Markets maintains "outperform", 12-month target price is $80.00

Monday 24 September 2007 (CP-T, CP-N) C$68.54
Bill MacKenzie, CA, CFA, 416 308 3405...... 3
HOLD (Unchanged);Target: C$79.00 (Unchanged)

Wednesday 12 September 2007 (CP) - $71.34 -
New Information on DM&E Transaction Outperform, Average Risk, Price Target: $80.00
CP submitted a Form 6K to the SEC, which provided additional details in regards to its proposed acquisition of DM&E. One of the more significant disclosures contains additional details on post-closing payments, milestone payments related to coal tonnages, and the timing of payments. The submission also outlines what constitutes the commencement of construction on the Powder River Basin project, which is significant since CP must make a $350 million payment when this condition is satisfied. The conditions by which the agreement may be terminated by either party are detailed, and state that if the "Effective Time" has not occurred by October 31st, either party may terminate the agreement provided specific conditions are met. As management stated in its conference call following the announcement of the deal, there will not be any break-up fee or liability on the part of either party terminating the agreement in accordance with the conditions listed in the 6K submission. RBC CM continues to believe the acquisition is a good strategic fit, providing CP with access to key geographical markets in the U.S., increased exposure to growth-oriented product segments, and the a potentially significant growth opportunity in hauling coal from the Powder River Basin.

Saturday 08 September 2007 CP unlikely to profit from costly DM&E acquisition, analyst says 
Ltd. (CP/TSX) took a huge gamble yesterday in agreeing to buy Dakota, Minnesota & Eastern, but the only... 

Friday 07 September 2007 CPR IN MAJOR U.S. INVESTMENT
Ltd., Canada's second-biggest railway, will pay US$1.48 billion to acquire the Dakota, Minnesota & Eastern Railroad Corp. The American line runs through eight American states. CPR says the acquisition will expand its network by 4,000 kilometres and increase its access to Midwest markets for farm products, coal and ethanol. The Canadian road will continue a project which DM&E was unable to carry out to rebuild almost 1,000 kilometres of track across South Dakota and Minnesota to convey low-sulphur coal from the Black Hills to eastern power plants.

(CP : TSX : $70.79)
Multi-billion dollar deal to buy largest US Class II railroad
Blackmont Capital maintains "hold", 12-month target price is $85.00

Wednesday 05 September 2007 (CP) - makes small acquisition. CP agreed to acquire Dakota Minnesota & Eastern Railroad Corp. for $1.48 billion in a deal that expands its current network by about 2,500 miles and increases its access to U.S. Midwest markets including agri-products, coal and ethanol. CP will pay $1.48 billion cash at closing and future contingent payments of up to about $1.0 billion. In conjunction with this purchase, CP has suspended activity under its current share repurchase program that began in March 2007. CP purchased 3.2 million shares in 2007.

(CP : TSX : $70.60 | NYSE : US$66.99)
Acquiring U.S. regional railroad
Blackmont Capital maintains a "hold", 12-month target price is cut to $72.75
BMO Nesbitt Burns maintains a "outperform", target price raised to $80.00
Credit Suisse maintains a "outperform", target price is $89.00
RBC Capital Markets maintains a "outperform", target price cut to $80.00

Wednesday 05 September 2007 1 >CP Rail to buy largest U.S. regional railway
Deal for Dakota, Minnesota & Eastern includes $1.48-billion cash payment upon closing and future contingent payments of up to about $1-billion

Friday 31 August 2007 (CP : TSX : $71.66 | NYSE : US$67.55)
Upgrade on price decline RBC Capital Markets maintains "outperform", 12-month target price is $81.00

Thursday 30 August 2007 Canadian Pacific Rail (CP) - $71.56 - Upgrading to Outperform
Outperform, Average Risk, Price Target: $81.00
RBC CM upgraded CP from Sector Perform to Outperform following the recent weakness in the stock price. CP shares have declined 18% from the highs reached on July 18th amidst takeover speculation, and RBC CM believes that at current levels the shares offer a compelling entry point. Carload data through August suggests that demand has remained strong in Q3, with grain and chemicals exhibiting the most strength while coal has delivered modest volume growth. RBC CM continues to consider CP to be a core holding given the company’s bulk franchise, favourable exposure to the booming Western Canada economy, and opportunities to realize further productivity grains through the company’s integrated Operating Plan (IOP). "Canaccord Capital Corporation "

Thursday 02 August 2007 MONTREAL: CP OFFERS SALE OF HERITAGE LANDMARK
The has put up for sale Windsor Station, one of the country's historical sites. The asset includes the courtyard, the office building upstairs and the Windsor Tower. CP says that if it finds a buyer, the railway will continue at the site in downtown Montreal as a long-term tenant in the office building. Windsor Station is protected under the Railway Heritage Stations Protection Act and is classified as a Natural Historic Monument. CP says it will work with the federal and provincial governments to ensure that the site's integrity is respected.

19/07/2007 CANADIAN PACIFIC(CP)$89.00 – PRIVATE EQUITY GETTING SET TO WORK ON THE RAILROAD? RATING: SECTOR PERFORM. TARGET: $95.00 (WAS $76.40). RISK RATING: ABOVE AVERAGE. INDUSTRY RATING: MARKET WEIGHT.
Yesterday, the Globe & Mail reported that a group led by Brookfield Asset Management and including Goldman Sachs and the Caisse had approached CP regarding a potential takeover of the Company. CP confirmed that Brookfield approached the company in April seeking exclusive negotiations and due diligence, although it is not currently in any discussions regarding a business combination. Based on the RailAmerica privatization, we estimate CP could garner a $90-$100 bid, while our LBO analysis suggests a $95 bid could produce a five-year IRR of ~9%, and far greater if the infrastructure assets are held longer. Interestingly, it is believed that the financial buyers could look to separate CP into an operating company to run the rail and an asset based company to own the network, generating lease revenue with the latter potentially rolled into a REIT or purchased by a tax-efficient pension fund. That said, if the real estate transaction is the catalyst behind the deal, we believe CP could do it itself, either through a REIT spin-off or through a sale to an outside investor followed by a major buyback. Fundamentally our target should remain at the $76.50 level, but in light of today’s developments we are increasing our target to $95.00 based on our takeover analysis. However, given the share price run-up, we maintain our Sector Perform. In fact, should the proposed value creating events take place at CP, we believe the other rails, including CN, should represent a better risk-reward scenario at this time, as any financial innovation would likely quickly spread industry wide.

Thursday 26 July 2007 (cp) $83.60 - q2 results in line. RATING: sector perform. TARGET PRICE: $95.00. RISK RATING: average.
CP reported Q2 EPS of $1.12, up ~12% y/y in line with consensus of $1.12. CP delivered earnings growth through volume/mix, pricing and cost savings, despite a 26-day strike by track maintenance employees (~$0.04 negative impact) and weather challenges (~$0.01-$0.02). Revenue was up ~7.5% y/y, reflecting continued global demand for bulk commodities, with growth in 5/7 segments. Price added ~4.5% and volume / mix added ~6.4% while coal price / FX eroded ~2.8%. Despite difficult operating conditions, freight gross-ton-miles were up 11% and the operating ratio of 74.7% (a Q2 best) improved 30 bps y/y. CP maintained its 2007 EPS guidance of $4.30 to $4.45, (9%-13% y/y growth). Also, it remains committed to buying back ~10% of its float under its current buyback program. Given commentary by various rail management teams that argue against a potential CP transaction coupled with our analysis, we believe CP’s share price may drift back to its fundamental value in the order ~$80.50. However, there is always the potential for a transaction, given continued (albeit dampened) private equity liquidity, rail industry capacity for greater debt, a novel structure emerging, etc. As a result, we maintain our Sector Perform rating and target price of $95.00, based on our takeover analysis. As the probability diminishes/time lapses, we would be inclined to move back to our fundamental target.

Wednesday 18 July 2007 nfb CANADIAN PACIFIC(CP)$77.05 – UPDATE ON COMPANY. RATING: SECTOR PERFORM. TARGET: $76.40. RISK RATING: AVERAGE.
The Globe & Mail reported today that a private equity consortium led by Brookfield Asset Management Inc. (BAM) is preparing a takeover offer for Ltd. (CP). Sources said Brookfield, in partnership with Goldman Sachs & Co. and the Caisse de dépôt et placement du Québec had expressed interest in a possible acquisition bid in April, but those advances were rebuffed. Instead, the board of the Calgary-based railway operator authorized a massive buyback of up to 10% of its stock that some observers interpreted as an attempt to thwart a takeover, but the paper reported that the stock repurchase program has not deterred Brookfield from pushing ahead, according to a handful of people close. We believe that CP could likely be taken private between a 21% to 25% premium from current levels.

Sunday 15 July 2007 rci ROAD & RAIL: Q2 2007 PREVIEW: LOOKING TO PUT H1 2007 STRUGGLES IN THE REAR VIEW MIRROR
North American Class 1 railroads are set to deliver Q2 2007 financial results in the back half of the month, with CN Rail reporting on July 23rd and CP Rail reporting July 24th. For CN Rail (Outperform, Target: $65.50 was $59.00), we are forecasting Q2 revenue of $2,026 million, EBITDA of $947 million, and FD EPS of $0.90 (Street at $0.95),1% above the $0.89 reported in Q2 2006. We have once again lowered our Q2 estimate (was $0.92) slightly given persistent near-term headwinds which have impacted both top line growth and operational efficiencies, including difficult weather conditions (e.g. flooding, which shut CN’s line to Prince Rupert for nearly a week), which have pressured activity in the Western economic hot spots, the overhang from the UTU strike in Q1 (e.g. realign supply chain, customers work through substitute truck contracts, etc.), and expanded fuel refining margins. The sharp run-up in fuel prices could also lead to timing-related margin pressure (i.e. surcharge based on a two-month lag). Finally, CN witnessed continued segment weakness (e.g. forest products, etc.). For CP (Sector Perform, Target: $76.00 was $69.00), we are calling for revenue of $1,215 million, EBITDA of $427 million, and FD EPS of $1.08, up ~8% y/y, while the Street sits at $1.13. While CP posted strong volume metrics in Q2 (carloads +5.4% y/y), primarily driven by potash, we nonetheless believe CP could be under pressure in Q2, as it noted weather issues (e.g. mud slides), expanded fuel margins, and the three-week strike by maintenance workers could impact Q2 by up to a nickel, while we would note Q2 marks the first quarter in which CP should face a 7-9% y/y decline in freight rates for EVCC movements, further pressuring margins, in our view. Given the operating conditions, CP posted weaker train speed and dwell metrics in Q2. Our $1.08 estimate for Q2 is down from $1.11 previously.

ROAD & RAIL: Q2 2007 PREVIEW: LOOKING TO PUT H1 2007 STRUGGLES IN THE REAR VIEW MIRROR North American Class 1 railroads are set to deliver Q2 2007 financial results in the back half of the month, with CN Rail reporting on July 23rd and CP Rail reporting July 24th. For CN Rail (Outperform, Target: $65.50 was $59.00), we are forecasting Q2 revenue of $2,026 million, EBITDA of $947 million, and FD EPS of $0.90 (Street at $0.95),1% above the $0.89 reported in Q2 2006. We have once again lowered our Q2 estimate (was $0.92) slightly given persistent near-term headwinds which have impacted both top line growth and operational efficiencies, including difficult weather conditions (e.g. flooding, which shut CN’s line to Prince Rupert for nearly a week), which have pressured activity in the Western economic hot spots, the overhang from the UTU strike in Q1 (e.g. realign supply chain, customers work through substitute truck contracts, etc.), and expanded fuel refining margins. The sharp run-up in fuel prices could also lead to timing-related margin pressure (i.e. surcharge based on a two-month lag). Finally, CN witnessed continued segment weakness (e.g. forest products, etc.). For CP (Sector Perform, Target: $76.00 was $69.00), we are calling for revenue of $1,215 million, EBITDA of $427 million, and FD EPS of $1.08, up ~8% y/y, while the Street sits at $1.13. While CP posted strong volume metrics in Q2 (carloads +5.4% y/y), primarily driven by potash, we nonetheless believe CP could be under pressure in Q2, as it noted weather issues (e.g. mud slides), expanded fuel margins, and the three-week strike by maintenance workers could impact Q2 by up to a nickel, while we would note Q2 marks the first quarter in which CP should face a 7-9% y/y decline in freight rates for EVCC movements, further pressuring margins, in our view. Given the operating conditions, CP posted weaker train speed and dwell metrics in Q2. Our $1.08 estimate for Q2 is down from $1.11 previously.

Thursday 17 May 2007 OTTAWA: CP STRIKE TALKS DON'T ACHIEVE RESULT
Ltd. and the Teamsters union continued the talks on Monday that began on Sunday evening in the presence of a federal mediator to find a way to end the three-week-old strike by 1,200 railway maintenance workers but the negotiations show no sign of a breakthrough. The two sides hadn't met since the strike started three weeks ago. Shippers have expressed fears that the strike will affect their businesses but CP says the walkout hasn't disrupted its service so far.

Friday 15 June 2007 (CP)$75.60 – STRIKE, MELTING SNOW & INFLATED CRACK SPREADS EXPECTED TO PINCH Q2. RATING: SECTOR PERFORM. TARGET: $69.00. RISK RATING: AVERAGE. INDUSTRY RATING: MARKET WEIGHT.
While CP has been one of the lone bright spots in the industry in Q2, with quarter-to-date carloads up ~5%, driven primarily by Sulphur & Fertilizer (+45% y/y), CP commented yesterday that costs related to the three-week strike by maintenance employees, continued weather headwinds, most notably the accelerated snow melt in B.C. (e.g. mud slides, etc.), and expanded fuel margins could impact its Q2 earnings by up to a nickel. We believe CP’s somewhat lower exposure to the U.S. economy and concentration on bulk segments, as well as the push out of volume from previous quarters, has driven its relative volume outperformance versus its peers. We are lowering our Q2 2007 EPS estimate to $1.11 from $1.18 previously (Street at $1.14) and our 2007e EPS to $4.42 from $4.46. Our 2008e EPS remains at $5.10. Despite the potential for a slightly weaker-than-expected Q2, CP nonetheless reiterated its full year EPS guidance of $4.30 to $4.45, indicating some of the shortfall should be made up as the year progresses, in our view. Given secular trends, including gains on truck, continued pricing power, and exposure to global economies, we continue to like the rail sector, including CP, and believe they should trade in line with a market multiple However, with CP trading at 17.1x 2007e EPS, vs its U.S. peers at 16.6x and CN at 15.6x, we believe the valuation spread is currently outside the sustainable range, especially if private equity speculation (which we believe has buoyed CP shares) is mitigated by recent developments in the bond markets.

8 june 2007 rci MONTREAL: RAIL STRIKE OVER A tentative deal has been reached in the strike by maintenance workers at Canadian Pacific Rail. The 3,200 CP employees have been off the job since May 15. Union officials say a three-year contract will be presented to the membership for ratification and that the workers will be back on the job within the next few days. No details of the proposed three-year contract are being released before the ratification process is completed. more

Monday 28 May 2007 EDMONTON: CP TO EXPAND IN OILSANDS DEVELOPMENT
Co. says it has begun the preliminary regulatory steps toward expanding its rail operations in support of Alberta's oilsands industry. CP says it has applied with the Canadian Transportation Agency to lay down 25.6 kilometres of track north of Edmonton to transport the products of existing or planned refineries there. Several refineries are planned to process heavy oil from the projects in northeastern Alberta. The railway says it plans to transport in addition to heavy oil such byproducts as sulphur, petroleum coke and various liquids and gases.

Thursday 24 May 2007 , Inc. (CP) - $77.74 - Raising Target on Q2 Volumes; Take-out Premium Seeping Into Valuation
Outperform, Average Risk, Price Target $81.00
An hypothetical LBO requiring 15% hurdle implies 20% upside to current prices. Assuming a 5x debt/EBITDA leverage, 9% cost of debt and a 15% required rate of return hurdle, RBC CM estimates a valuation of 6.3x EV/EBITDA for CP which represents $93.00/share. RBC CM does not consider CP to be an ideal candidate for an LBO transaction but can see how it might be an interesting consideration for a private equity player given its attractive fundamentals and appealing structural characteristics.
RBC CM believes CP’s Q2/07 volumes are rebounding nicely as expected. Second quarter carload data to the week ended May 12 shows volume growth is coming in nicely as a result of pent-up demand following the harsh winter weather in Q1. Total carloads are up 5.7%, led by grain (+6%), chemicals, potash (+28%) and petroleum products (+64%). RBC CM is increasing its estimates to reflect higher volume estimates as well as the added efficiency improvements that come with higher volumes. EPS estimates for 2007 and 2008 go to $4.52 and $5.37 (from $4.45 and $5.18), respectively. Target price is increased from $77.00 to $81.00 to reflect the higher estimates. RBC CM continues to like CP and believes that a continued possibility exists that estimates will go higher based on the strong demand for bulk commodities (CP's core franchise) and higher margins related to CP's continued cost cutting initiatives.

Thursday 17 May 2007 CP strike worries shippers
Thousands of track maintenance workers at Ltd. walked off the job across the country yesterday, leaving shippers of everything from grain to chemicals wringing their hands over the prospect of major service disruptions.

Thursday 26 April 2007 (CP) - $70.54 – Share Buyback and Growth in Bulk
Business should Drive Earnings Growth
Outperform, Average Risk, Price Target $77.00
CP reported Q1/07 operating EPS of $0.78, which was in line with RBC CM expectations of $0.77 and up from the $0.72 last year despite the impacts of severe winter weather (a $0.10 drag) that persisted through much of the quarter. Demand for rail services remains strong especially the demand from bulk commodities which is ramping strongly – even with the Q1 weather, sulphur and fertilizers were up 31%. The CP Board has authorized the re-purchase of up to 15.5MM shares in 2007 (or 10% of the public float), which is up significantly from the 5.5MM shares initially contemplated and this should help to boost EPS in the coming quarters. Based on the strength in CP's core bulk franchise, together with opportunities to increase earnings on improvements in operating ratio, RBC CM believes there is strong potential for upside earnings surprise in 2007. At 13.6x its 2008 EPS estimate, CP shares are now trading at a 0.7 point discount to the group, suggesting good value at current levels. Price target is derived by applying a 15x multiple to 2008 EPS estimate.

Saturday 07 April 2007 (CP) - $65.36 – Reducing Estimates to Reflect Difficult Weather in Q1, possible April Labour Action Outperform, Average Risk – Price Target $77.00
RBC CM is reducing Q1/07 EPS forecast to reflect impact of difficult weather conditions in March (a series of events including avalanches and washouts) which resulted in slower train speeds, higher terminal dwell times and lower volumes. Demand for rail services remains healthy reflecting strong export shipments of grain and potash, and the industrial and consumer products sector should continue to benefit from a strong economy in Western Canada. However the possibility of a labour action exists by CP’s track inspection replacement and repairs and maintenance employees who will be in a legal strike position on April 25. This should not impact operating results as these employees are not involved in operating trains or terminals. RBC CM is reducing our EPS estimate to $4.45 from $4.53 to reflect lost business due to March weather conditions. RBC CM is maintaining our target price of $77.00, and Outperform Average Risk rating.

Sunday 18 March 2007 Reducing Estimates on Lower Volumes due to Harsh Winter Weather
Outperform Average Risk – Price Target: $77.00
RBC CM reduced their Q1/07 EPS estimate for CP (to $0.80 from $0.90) to reflect the impact of a harsh winter in Western Canada during the months of January and February. Despite these challenges, the revised estimates still reflect over 8% EPS growth on a Y/Y basis in Q1/07. Although demand in key product groups such as coal and grain remain high, difficult weather conditions have resulted in carload numbers being weaker on a Y/Y basis. RBC CM also increased their expense assumptions due to the higher expenditures and lower productivity. The reduction in FY 2007 EPS estimates is slightly offset by the impact of CP’s share buyback program, which is greater than originally forecasted. 2007 EPS estimate for CP has been reduced to $4.53 from $4.56. RBC continues to observe pent up demand for rail services throughout CP’s various product groups, particularly within bulk commodities and intermodal, and have increased their 2008 EPS estimate to $5.18 from $5.13. The 12-month target price and rating both remain unchanged.

Tuesday 13 February 2007 (CP)$63.06 – BACK LOG AND LOW PORT INVENTORIES SHOULD PROVIDE REQUIRED VOLUME BOOST. RATING: SECTOR PERFORM. TARGET: $65.00. RISK RATING: AVERAGE. INDUSTRY RATING: UNDERWEIGHT.
After the close, Teck Cominco provided a preliminary 2007 coal production estimate, calling for 9 million tonnes (for its 40% share), which we estimate translates into ~22.5 million tonnes. Teck noted the estimate is preliminary and will be finalized after completion of current sales negotiations, and may be impacted by poor weather and rail performance in Q1. We believe the guidance implies an approximate 850K y/y production tonnage increase. Recall, to claw back an estimated $40-$45 million revenue shortfall from a 7%-9% y/y decline in freight rates (estimated $0.15-$0.20 EPS headwind), we believe CP has assumed a 2.0 million tonne increase in coal volume in deriving its 2007 EPS guidance of $4.30-$4.45. However, despite the lower headline volume number, CP believes the required catch up on volumes (given weather / low-06 volume), and low port inventory (needs replenished) (i.e. a timing issue between production/delivery, which could work to the 1.0 million tonne+ range, in our view), should nonetheless drive its required tonnage growth, indicating CP should remain within its guidance range, in our view. While there could be confusion as the market digests the EVCC volume outlook, we believe it appears CP should remain on track, especially considering the initial volume guidance is yet to be finalized, with Teck likely to provide a conservative preliminary number, in our view.

Wednesday 31 January 2007 LIMITED(CP)$63.80 – Q4 RESULTS RECAP. RATING: SECTOR PERFORM. TARGET: $65.00. RISK RATING: AVERAGE. INDUSTRY RATING: UNDERWEIGHT.
CP reported adjusted Q4 2006 FD EPS of $1.15, up 7.5% from the $1.07 earned in Q4 2005, slightly ahead of our $1.14 estimate and slightly below Street consensus of $1.16. Revenue grew 2% y/y to $1,190 million (up 3% excluding the $14 million impact from FX), slightly below our $1,211 million estimate. CP estimates difficult wintry conditions eroded ~$10 million from its top line in Q4. CP reported growth in four of its seven segments, led by Sulphur and fertilizer (+19%) and Grain (+16%), offset by weak Coal revenue (-16%). CP’s Q4 operating ratio of 73.1% improved 80 bps y/y, and was basically in line with our 73.4% estimate. CP maintained its 2007 EPS guidance at $4.30 to $4.45, implying 9%-13% growth in the coming year, although we expect somewhat weaker growth in H1 before rebounding in H2. CP now anticipates in excess of $250 million in FCF in 2007, up from in excess of $200 million previously. We are decreasing our 2007e EPS slightly to $4.45 from $4.47, and are introducing a 2008e EPS estimate of $5.05. We continue to rate CP Sector Perform with a $65.00 target price, based on 14.5x our 2007e EPS. We believe the current rail renaissance still has room to run, as the rails improve their service offering, and commensurate pricing power, driving stronger margins and returns. However, we believe current coal uncertainty and CP’s valuation metrics warrant caution at this time.

Tuesday 30 January 2007 globe CP Rail sees profit rising this year
Profit in the fourth quarter rose 6 per cent to $145.6-million or 92 cents a diluted share from $137.1-million or 86 cents a share. ....railway sees earnings between 9 per cent and 13 per cent higher than last year.

Saturday Jul 30, 2005 Revenue rises, profit hits $123 million
CALGARY— Ltd. says its profit leaped to $123.2 million in the three months ended June 30. The Calgary-based railway cites a revenue jump from soaring shipments of coal and other items and improved efficiency.

Wednesday Jul 27, 2005 cc (CP : TSX : $44.36) - Buy - Target: $49.00 Robert Fay
Comment: CP Railways reports Q2/05 results
(CPR) announced its second quarter results on Tuesday, July 26, 2005. CPR reported Q2/05 fully diluted EPS of $0.77, compared with fully diluted EPS of $0.53 for Q2/04. Adjusted EPS for Q2/05 was $0.87, up 34% from $0.65 in Q2/04. The Q2/05 results were largely in line with our forecasts with variances occurring below the Operating Income line. Management maintained its previous guidance for revenue growth of 12- 14% for the year and EPS guidance of $3.15 to $3.25 for F2005, however it did state that an update would be provided later in the year. These management estimates are based on two key assumptions; an average price for fuel of $55.00/bbl WTI and an average US/Canadian dollar exchange rate of US$0.81 (C$1.23) for F2005. Our 2005 EPS estimate of $3.23 assumes revenue growth of 10.9% for the year (9.7% over the last two quarters) driven by freight rate increases and fuel surcharges while volumes remain flat. The railroads that have all reported (CP, CNR, BNI and UNP) strong results that we expect to continue through at least 2005 driven by higher freight rates, fuel surcharges/hedging, solid volumes (albeit low growth) and cost controls. We expect CP Railway to show a strong second half, primarily due to its bulk businesses. We expect grain to have a strong fourth quarter given the current outlook for the crop in western Canada. We also expect volumes to increase in the second half of this year for its Coal and Sulphur & Fertilizer businesses after the slow second quarter. Freight rates should continue to rise driven by the tight capacity in the land freight industry in North America and fuel and other surcharges. If the Canadian dollar remains at $0.81 it will lap the strong increases over the past year by the fourth quarter. We are maintaining our BUY recommendation and our target price of $49.00 which is based on 13 times our fully diluted, 2006 EPS of $3.84.

TD Saturday Jan 22, 2005 (CP-T, CP-N; C$40.76) BUY (unchanged); Target: C$44.25
CP Announces Labour Agreements

Friday Jan 28, 2005 (CP-T C$40.77) CP reported Q4/04 earnings before special items of $0.73 per share versus $0.71 per share last year. This was slightly ahead of our forecast of $0.71 per share and First Call consensus of $0.72 per share.
We maintain our 1-Sector Outperform rating on the shares of CP.
Rating: 1-SO Risk: Med Target: 1-Yr $46.00 2-Yr $50.00

From Scotia Tuesday Jan 11, 2005 Limited (CP-T C$39.69)
We have modestly raised our one-year price target for CP shares to $46 from $45, noting the met coal pricing story remains a wildcard, and are maintaining our 1-Sector Outperform rating.
Rating: -- 1-SO Risk: -- Med Target: 1-Yr $46.00 2-Yr $50.00

click for w-n CP Archives 2002

DOW Reuters TSE Weather

© 1997,98,99,2000,01 by David T. Nicholson

We have VCR tapes available Please phone (514) 934-0023
or e-mail us your thoughts.